Investment grade

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Investment grade

In the context of bond ratings, the rating level above which institutional investors have been authorized to invest.

Investment Grade

Describing a bond with a medium or high rating. Bonds rated Baa3 by Moody's or BBB- by S&P or Fitch. Investment-grade bonds are considered sufficiently low-risk that the law allows banks to invest in them. In addition to being low-risk, investment-grade bonds are low-return, greatly reducing the cost on the issuer. Most American Treasury and municipal bonds are investment-grade. See also: Junk, High-Rating.

Investment grade.

When a bond is rated investment grade, its issuer is considered able to meet its obligations, exposing bondholders to minimal default risk.

Most US corporate and municipal bonds are rated by independent services such as Moody's Investors Service and Standard & Poor's (S&P).

The ratings are based on a number of criteria, including the likelihood that the bond issuer will be able to make interest payments and repay the principal in full and on time.

The four categories of bonds rated BBB and higher by S&P or Baa and higher by Moody's are considered investment grade.

References in periodicals archive ?
In longer-term markets, rates on Treasury bonds had risen appreciably while rates on high-grade bonds had changed little and those on lower-rated debt had fallen substantially.
These bond segments are now expensive and investors need to understand that exploiting the yield pickup over high-grade bonds will become riskier in 2007.
Against this backdrop GCC credits remain well-bid along with high-grade bonds in developed markets (DM).
Notwithstanding the decrease in realized capital gains, Peerless maintains a very conservative investment portfolio that consists of high-grade bonds that generate a steady income stream offsetting underwriting losses.
After four years of focusing on high-grade bonds, Llama Asset Management Co.
White added that high yield and high-grade bonds are not tightly correlated and the combination of those as a whole could produce a portfolio that has less volatility than each individual component.
comprised of high-grade bonds (74%) and considered conservatively
The company's investments are conservative, consisting primarily of high-grade bonds.
Country Life has extremely strong liquidity based on Standard & Poor's liquidity ratio of 487%, with an investment portfolio consisting of high-grade bonds.
The company's strategy is to back liabilities with high-grade bonds and to invest surplus in equities.
The investment portfolio mostly consists of high-grade bonds augmenting, on a pro forma, consolidated basis, the companies' strong capitalization.
The investment portfolio consists primarily of high-grade bonds, producing a stable investment income stream.

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